Ask RedWeek / May, 2020

COVID-19 questions about travel and timeshare

When will my timeshare resort reopen? When will it be safe to travel? When will travel return to normalcy? Will timeshare companies survive this?

These are critical questions for all potential travelers and timeshare owners following the deadly progress of the COVID-19 pandemic. It is already safe to conclude that no vacations in 2020 will be anything close to normal.

"READY OR NOT, MOST STATES GET MOVING"

This May 7th headline pretty much says it all. Just as nearly all states and cities take first-steps to reopen their economies, hospitality, hotel, and timeshare companies are preparing to reopen as well, some as early as mid-May. Others are targeting slow rollouts for Memorial Day, June and July.

Resorts are keeping their fingers crossed as well, hoping that the pandemic does not surge or spike with a second wave of death and destruction nationwide that would wreck the summer vacation season.

All major developer companies have posted COVID-19 updates about reservations and cancellation issues on their websites - see our recent blog posts for the relevant links. Many legacy resort HOAs, which have much smaller staffs than a brand-name developer, are also reaching out to owners online. But if you can stand a long wait-time on the phone, calling your resort's owner services may be the best way to get all of your questions answered.

Timeshares in Transition as Summer Season Approaches

The timeshare world has been stuck in time since March 12, when Disney parks closed and Major League Baseball cancelled all spring training games in Florida and Arizona. The next day, timeshare resorts in those, and many other vacation capitals roped off their spas and common areas and started cancelling reservations as timeshare owners realized that the best thing to do, given the circumstances, was to stay home.

Cities and states followed suit, restricting travel with stay-at-home orders and imposing six-foot social distancing guidelines. In the face of these wide-ranging changes, timeshare resorts shuttered North American sales centers and closed properties. A few, including many in the Marriott Vacation Club chain, stayed open for owners but closed to renters and exchangers. Still, occupancy rates crashed to 10 to 30 percent at the properties that struggled to stay open --- with ghost-town amenities: no pools, spas, housekeeping, restaurants, BBQs or resort activities. Not many on-site staff, either.

Facing a crush of cancellations, many timeshare developers and legacy HOAs started offered owners no-penalty, free cancellations on existing reservations through the end of April, then extending to May, and some through June. If the COVID crisis continues, these policies will no doubt need to be extended.

For the short term, brand-name developers are encouraging owners to book future vacations after June 1. Wyndham, the world's largest timeshare and exchange company, expects to reopen some of its 230 resorts after Memorial Day, with a slow "ramp up" that will continue in June and July. The company says its urban sites are likely to be the last to reopen.

Marriott Vacation Club plans to lift restrictions on its resorts this month, but that is always conditioned upon compliance with local health guidelines for social distancing. In a normal year, Marriott's timeshares would start seeing 90 percent occupancy rates by mid-June. Not this year.

Hilton Grand Vacations suspended operations at resorts in California, Colorado, New York, and Hawaii and furloughed 6,100 (of 9,100) employees. The reopening was originally scheduled for April 30, now it's looking like June 1 is the target.

Disney Vacation Club, meanwhile, closed all resorts in March until further notice. They are doing some extensions of points usage for a number of owners with affected reservations, but are also putting restrictions on owners borrowing points from future years. DVC also told owners that they may receive a credit in mid-December "for unused monies" from their HOA budgets - but it's yet to be determined what that will look like. The full statement from Disney is referenced here.

Here's what to expect on your next vacation

Many companies have already announced sweeping changes in their protocols for keeping resorts clean, safe, and COVID-free. Housecleaning regimes, lobbies, restaurants, and even condo furniture will all look a little, if not a lot, different on your next vacation. Expect to see lots of sanitizing stations, face masks, and other protective gear at most resorts. Many companies are also converting guests to no-contact check-ins, where guests are notified by text when their suite is ready for occupancy.

Wyndham shared with us a video of how they are approaching cleaning at Wyndham Bonnet Creek. They have rolled out a "Vacation Ready" program detailing their new procedures.

Thinking of going to Hawaii? Prepare yourself for a 14-day quarantine upon arrival. There is some talk of this being lifted June 1, as Hawaii's tourism industry suffers, but time will tell. Other offshore resorts are also considering two-week quarantines for visitors. Before you plan any trip, be sure to check with the resort to see what restrictions are currently in place, as well as which amenities will be closed or limited, so you aren't surprised when you arrive.

1st Quarter was a Tsunami for Public Timeshare Companies

The numbers tell the story for public timeshare companies that saw their stock prices plummet after March 12. From every perspective, Q1 of 2020 was an all-time disaster for US timeshare companies. Here's a snapshot of several companies that just reported earnings.

Despite having $1 billion in cash, Wyndham reported a net loss of $134 million in operating costs during the first quarter. The company also took a provision charge (writedown) of $225 million to offset anticipated owner defaults on timeshare loans. Overall revenues declined 40 percent to $409 million in Q1, down from $683 million in Q4 of 2019.

Marriott Vacation Club saw a similar shortfall in sales and revenue. Timeshare sales declined 13 percent from a year ago. Due to the impacts of COVID-19, the company reported an estimated net loss ranging from $39 million to $114 million. The company also cut executive salaries by 50 percent and layed off 65 percent of its workers in Q1 while deferring inventory investments by $260 million.

What's the Big Picture, Long Term?

The COVID crisis poses the biggest threat to traditional timeshare in its 50-year lifetime. In response, major timeshare companies are already lobbying Congress to include timeshare in future bailouts. Industry executives, meanwhile, have also stated, publicly, that the industry may have to create a new product, and business model, to be viable after the crisis subsides.

There are other questions, too, with answers looming in the distance.

Which companies will stay in business? Which ones will sell themselves to a competitor? Which legacy results will fold? What will happen, if anything, to all of the exit companies?

Will companies try to impose new assessments on owners to cover COVID losses? Or will HOAs offer refunds to cover owner losses from the crisis?

The crunch time will arrive this fall, when rank-and-file owners receive their maintenance fee bills for 2021. Will they be able to pay? Will companies come up with new programs to persuade new buyers, or existing owners, to join or stay within the timeshare family? Time will tell.

About the author

This answer was provided by RedWeek contributor, Jeff Weir. Jeff is a California-based journalist who has covered California, Congress, and the White House. He also has roots in Silicon Valley, where he directed public relations and marketing programs for high-tech companies. He is also a timeshare owner and member of RedWeek.com.

4 Comments

  • Avatar for sandbarjo14
    sandbarjo14
    May 13, 2020 (2 weeks ago) • Updated May 13, 2020 05:11 AM

    How can any company guarantee my safety when taking into account bedding including the comforter and pillows,kitchen countertops and dishes, remote control devices and people in general not respecting social distancing on beaches. Who is going to want to rent my week under these circumstances with no vaccine in place? The employment rate is upwards of 30 million people in the United States. People are worried about paying their rent and putting food on the table and keeping their children safe. My choices as an owner are limited to using my week currently booked end of Summer, banking it with a timeshare exchange company which adds exchange fees and annual membership fees another $300 or rent my week. If I bank my week under 60 days my exchange options are limited. I have faithfully paid my timeshare annual maintenance fees which exceed $1400 a year and now using my week or renting my week puts myself or a guest at risk. The travel industry has been decimated at present and I have full faith that it will turn around in time but not in the near future. I wish there were better solutions for owners in this most difficult time with a maintenance fee credit for 2020 because it’s just not safe enough yet to use your week especially if there is a spike in the Fall. I have truly enjoyed my timeshare ownership and stayed at wonderful places because of it and empathize with staff and businesses in the restaurant, travel and hospitality related industries who have lost their livelihood.

  • Avatar for kurta51
    kurta51
    May 14, 2020 (2 weeks ago)

    My HOA gave additional time to pay... I wonder if timeshare companies would do the same for owners?

    • Deleted message
    This message was deleted.
  • Avatar for samnmonal
    samnmonal
    May 26, 2020 (3 days ago)

    Will my purchase be safe if it is not in green? A lot don't have green don/t want to get scammed? Thanks Sam

  • Avatar for phyl21
    phyl21
    RedWeek Team
    May 26, 2020 (3 days ago) • Updated May 26, 2020 08:43 AM

    If the posting is highlighted in green and has the Verified and Protected flag, your payment will be made to RedWeek and will not be disbursed to the owner until two business days after you check into the resort. For any posting that is not RedWeek verified and protected, we encourage you to take steps to make sure your transaction is safe. You will find more information on this page: Stay Safe